SHANKAR JHALANI, Jaipur V. ITO, Jaipur

ITA 644/JPR/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2110 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 10-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Accommodation entries; Onus to prove
• Section: 133(6); 10

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 644/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 SH. SHANKAR JHALANI B-3, LALJI KA BAGH, MOTI LAL ATAL ROAD, JAIPUR. CUKE VS. THE ITO, WARD 3(4), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ABTPJ9902E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI ANOOP SINGH (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 15/02/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 21/02/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 06.05.2015 OF LD. CIT (A), JAIPUR FOR A.Y. 2009-10. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LD. CITA) HAS ERRED ON FACT AND IN LAW IN D ISMISSING THE APPEAL OF THE ASSESSEE FOR NON APPEARANCE WITHOUT P ROVIDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. 2. THE LD. CIT(A) HAS ERRED ON FACT AND IN LAW IN N OT DECIDING THE FOLLOWING GROUND OF APPEAL RAISED BEFORE HIM ON ME RIT: ITA NO. 644/JP/2015 SH. SHANKAR JHALANI VS. ITO, JAIPUR 2 (I) THE AO HAS ERRED IN REJECTING THE BOOKS OF ACCOUNT S BY APPLYING PROVISIONS OF SECTION 145(3) (II) THE AO HAS ERRED IN MAKING TRADING ADDITION OF RS. 14,97,088/- BY DISALLOWING 25% OF ALLEGED UNVERIFIA BLE PURCHASES OF RS. 59,88,350/- 2.1THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN EVEN NOT FOLLOWING THE DECISION OF HONBLE ITAT GIVEN IN VAR IOUS CASES WHERE PURCHASES ARE HELD TO BE UNVERIFIABLE WHILE D ISMISSING THE APPEAL OF ASSESSEE FOR NON-APPEARANCE. 3. THE ASSESSEE CRAVES RIGHTS TO ADD, ALTER OR AMEN D ANY OF THE GROUNDS OF THE APPEAL. 4. THE APPROPRIATE COST BE AWARDED TO THE ASSESSEE. 2. EARLIER THE APPEAL OF THE ASSESSEE WAS DISPOSED OF VIDE ORDER 07.04.2016 HOWEVER, SUBSEQUENTLY THE TRIBUNAL VIDE ORDER DATED 04.01.2018 IN M.A. NO. 62/JP/2017 HAS RECALLED THE EARLIER ORDER FOR HEARING AND ADJUDICATION OF THE APPEAL AFRESH. 3. THE ASSESSEE IS ENGAGED IN THE MANUFACTURING AND TRADING OF JEWELLERY ETC. DURING THE SCRUTINY ASSESSMENT U/S 1 43(3) OF THE ACT THE AO ASKED TO ASSESSEE TO FURNISH DETAILS OF PURCHASE AND RAW MATERIAL AND FURNISH, THE COMPLETE ADDRESS OF THE SUPPLIER. IN RESPONSE THE ASSESSEE VIDE HIS LETTER DATED 24.11.2011 FURNISHED THE DETAILS. TO VERIFY THE GENUINENESS OF THE PURCHASES MADE BY THE ASSESSEE THE AO ISSUED A NOTICE U/S 133(6) TO 10 SUPPLIERS ASKING T HEM TO FURNISH THE DETAILS OF SALES MADE TO THE ASSESSEE. THE AO ALSO ASKED TO FURNISH THE ITA NO. 644/JP/2015 SH. SHANKAR JHALANI VS. ITO, JAIPUR 3 COPY OF ACCOUNT OF THE ASSESSEE IN THEIR BOOKS AS W ELL AS THE DETAILS/ MODE OF PAYMENTS. THE AO NOTED THAT THE NOTICES WER E RECEIVED UN- SERVED BY POSTAL AUTHORITIES WITH THE REMARKS ADDR ESS MOVED NOT EXISTED, INSUFFICIENT ADDRESS, REFUSED, EXCEPT IN CASE OF TWO SUPPLIERS NAMELY M/S DEZAL INTERNATIONAL AND M/S SU MANGLAM IN WHICH NEITHER THE NOTICES RECEIVED BACK NOR THEY COMPLIED WITH THE NOTICES. ACCORDINGLY, THE AO ASKED TO ASSESSEE TO PRODUCE T HE SUPPLIERS FOR EXAMINATION, IN RESPONSE THE ASSESSEE FURNISH ITS E XPLANATION AND REPLY DATED 16.12.2011 AND SUBMITTED THAT THE ASSESSEE H AS FURNISHED THE PURCHASE CONFIRMATION GIVEN BY THEIR SUPPLIER WHICH ALSO MENTIONS PAN OF THE SUPPLIERS. THUS, THE ASSESSEE CONTENDED THA T HE HAS SUBMITTED CONFIRMATION WITH PAN WHICH IS DUE COMPLIANCE TO NO TICE ISSUED U/S 133(6) OF THE ACT. THE AO DID NOT ACCEPT THE CONTEN TION OF THE ASSESSEE AND MADE A DISALLOWANCE OF 25% OF THE UNVERIFIABLE PURCHASES MADE FROM THESE 10 SUPPLIERS OF RS. 59,88,350/- WHICH CO MES TO RS. 14,97,088/-. THE AO HAS ALSO REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE U/S 145(3) OF THE IT ACT. ON APPEAL, THE L D. CIT(A) HAS CONFIRMED THE ACTION OF THE AO IN REJECTING THE BO OKS OF ACCOUNTS AS WELL AS ADDITION OF 25% OF UNVERIFIABLE PURCHASES A S NONE HAS APPEARED ON BEHALF OF THE ASSESSEE AND THE IMPUGNED ORDER IS PASSED EX-PARTE. ITA NO. 644/JP/2015 SH. SHANKAR JHALANI VS. ITO, JAIPUR 4 4. BEFORE US, LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE LD. CIT(A) NOT AFFORDED EFFECTIVE PROPER HEARING TO THE ASSESSEE AND CONFIRMED THE DISALLOWANCE MADE BY THE AO IN SUMMER Y MANNER. HE HAS FURTHER SUBMITTED THAT THE AO HAS ACCEPTED THE FACT THAT FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS REPORTED THE GROSS PROFIT ON THE TOTAL TURNOVER OF RS. 2.10 CRORES @ 14.50% AS A GAINST GP @ 14.02% ON THE SALE OF RS. 1.54 CRORES FOR THE ASSES SMENT YEAR 2008-09 AND 13.99% ON THE TOTAL TURNOVER OF RS. 2.02 CRORES FOR THE ASSESSMENT YEAR 2007-08. THUS THE GP DECLARED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IS MORE THAN THE GP OF THE PAST YEARS DESPITE THE FACT THAT THE TURNOVER FOR THE YEAR UNDER CONSIDERA TION IS MORE THAN TURNOVER OF THE EARLIER YEARS. THIS LD. AR OF THE A SSESSEE HAS SUBMITTED THAT EVEN IF THE BOOKS OF ACCOUNTS ARE REJECTED BY THE AO NO ADDITION IS CALLED FOR WHEN THE GROSS PROFIT DECLARED BY THE AS SESSEE FOR THE YEAR UNDER CONSIDERATION IS MORE THE PAST G.P. 5. ON THE OTHER HAND, LD. DR HAS RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT WHEN THE ASSES SEE HAS FAILED TO DISCHARGE ITS ONUS TO PROVE THE GENUINENESS OF THE PURCHASES THEN, THE ASSESSING OFFICER WHILE MAKING A DISALLOWANCE OF 25 % OF SUCH ITA NO. 644/JP/2015 SH. SHANKAR JHALANI VS. ITO, JAIPUR 5 PURCHASES HAS TAKEN A VERY LENIENT VIEW. HE HAS THU S CONTENDED THAT DISALLOWANCE MADE BY THE AO BE CONFIRMED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE AO WANTED TO VERIFY THE GEN UINENESS OF THE PURCHASE BY ISSUING NOTICE U/S 133(6) OF THE ACT HO WEVER, THE NOTICE ISSUED TO 8 OUT OF 10 PARTIES WERE RECEIVED BACK U N-SERVED DUE TO THE REASONS OF ADDRESS MOVED, NOT EXISTED, INSUFFI ENT ADDRESS REFUSED ETC. THE NOTICE ISSUED TO THE REMAINING T WO PARTIES THOUGH DID NOT RECEIVED BACK UN-SERVED HOWEVER, NO COMPLIANCE OF NOTICE U/S 133(6) WERE MADE BY THESE TWO PARTIES. THE AO ASKED TO PRODUCE THE SUPPLIERS FOR EXAMINATION HOWEVER, THE ASSESSEE PRO DUCE THE CONFIRMATION FROM THE SUPPLIERS ALONG WITH PAN. THE AO ACCORDINGLY REJECTED THE BOOKS OF ACCOUNTS AND MADE AN ADDITION EQUIVALENT TO 25% OF THE PURCHASES MADE FROM THESE 10 SUPPLIERS ON AC COUNT OF UNVERIFIABLE PURCHASES. THUS, ONCE THE AO HAS REJEC TED THE BOOKS OF ACCOUNTS BY INVOKING THE PROVISIONS OF SECTION 145( 3) OF THE ACT, THE INCOME OF THE ASSESSEE WAS REQUIRED TO BE ASSESSED ON THE BASIS OF A REASONABLE AND PROPER ESTIMATES. WE NOTE THAT THE C OORDINATE BENCHES OF THIS TRIBUNAL IN CASE OF CIT VS. M/S ALLIED GEMS CORPORATION IN ITA ITA NO. 644/JP/2015 SH. SHANKAR JHALANI VS. ITO, JAIPUR 6 NO. 794& 795/JP/2011 VIDE ORDER DATED 15.12.2017 HA S CONSIDERED AN IDENTICAL ISSUE IN PARA 5 IS AS UNDER:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT BY INVOKING THE PROVISIONS OF SECT ION 145(3). THE ISSUE OF REJECTION OF BOOKS OF ACCOUNTS IS INVO LVED IN THE CROSS OBJECTION FILED BY THE ASSESSEE, THEREFORE, W E DEAL WITH THIS ISSUE WHILE DECIDING THE CROSS OBJECTION. ONCE, THE BOOKS OF ACCOUNTS ARE REJECTED BY THE AO THE ONLY COURSE OF ACTION LEFT TO THE AO IS TO ASSESS THE INCOME OF THE ASSESSEE ON T HE BASIS OF BEST JUDGMENT AND GP RATE IS CONSIDERED AS PROPER AND REASONABLE BASIS AND GUIDANCE FOR THE BEST JUDGMENT . ONCE, THE BOOKS RESULT ARE REJECTED THE ASSESSING OFFICER CAN NOT PROCEED TO MAKE AN ADDITION TO THE INCOME OFFERED BY THE ASSES SEE AS PER BOOKS RESULT. HOWEVER, THE AO IN THE CASE OF THE AS SESSEE INSTEAD OF APPLYING THE GP RATE MADE ON ADDITION@ 25% OF TH E PURCHASES TO THE BOOK RESULTS. THIS ACT OF THE ASSESSING OFFI CER ITSELF CONTRADICTS THE DECISION OF REJECTING THE BOOKS OF ACCOUNTS AND BOOKS RESULT. THE TRIBUNAL IN ASSESSEES OWN CASE F OR THE ASSESSMENT YEAR 2006-07 HAS CONSIDERED THIS ISSUE A ND UPHELD THE ORDER OF THE LD. CIT(A) IN PARA 2.20 AND 2.30 A S UNDER:- 2.20 HENCE, THERE ARE CERTAIN CONCERNS FOR WHICH R EVENUE GOT EVIDENCE IN THE FORM OF STATEMENT RECORDED IN RESPE CT OF SUCH PARTIES, OPENING BALANCE IS RS. 37,06,175/- WHILE T HE CLOSING BALANCE IS RS. 42,81,496/-. IT MEANS THAT THERE IS AN ACCRETION OF AMOUNT OF RS. 5.75/- LACS. IT MEANS THAT TO THIS EX TENT, ACCRETION IN PURCHASE IS WITHOUT SUPPORTING THE CORRECT BILLS . OF COURSE, TOTAL OPENTING BALANCE OF ALL PARTIES IS RS. 1,15,43,782/ - AND THE CLOSING BALANCE IS RS. 1,33,36,193/-. HOWEVER, LOOK ING TO THE ACCRETION IN THE CLOSING BALANCE OF THE CONCERNS FO R WHICH REVENUE HAS MATERIAL, THE ADDITION CONFIRMED BY THE LD. CIT(A) IS REASONABLE. ITA NO. 644/JP/2015 SH. SHANKAR JHALANI VS. ITO, JAIPUR 7 2.30 THE HONBLE P & H HIGH COURT IN THE CASE OF UP LAKESH METAL INDUSTRIAL V CIT 177 TAXMAN 298 HELD THAT ISSUE DEC IDED BY THIS IS IN THE REALM OF APPRECIATION EVIDENCE. THE FIND OF TRIBUNAL AS MENTIONED IN THIS JUDGMENT IS AS UNDER:- ' HOWEVER, IN OUR OPINION THE OBSERVATION OF THE ASSE SSING OFFICER THAT THE ASSESSEE WAS PRIMA FACIE REQUIRED TO PROVE THE GENUINENESS OF THE TRANSACTION AND IDENTITY OF THE CREDITORS IS NOT MISPLACED BECAUSE THERE IS NO DISTINCTION LAID BETW EEN THE TRADE CREDITOR AND THE NON-TRADE CREDITOR AND WE ARE FURT HER OF THE OPINION THAT IN CASE THE ASSESSEE CLAIMS LIABILITY OF PAYMENT TO THE TRADE CREDITORS SHOWN IN THE BALANCE-SHEET, THE ASSESSEE IS DEFINITELY REQUIRED TO PRIMA FACIE PROVE THE IDENTI TY OF THE TRADE CREDITORS AS WELL AS THE GENUINENESS OF THE TRANSAC TION. IN THIS CASE, ADMITTEDLY THE ASSESSEE HAS NEITHER BEEN ABLE TO DISCLOSE THE COMPLETE ADDRESSES OF THE TRADE CREDITORS NOR I S ABLE TO GIVE THE COMPLETE ADDRESSES OF THE CONSIGNORS NOR THE NA ME HAS BEEN MENTIONED ON THE CHALLAN FORMS, SO THE VERIFICATION OF THE SAME BY THE ASSESSING OFFICER BECAME TOTALLY IMPRACTICAB LE ON ACCOUNT OF LACK OF THIS COMPLETE INFORMATION SUPPLIED BY TH E ASSESSEE. IT MEANS THAT THE ASSESSEE FAILED IN ESTABLISHING THE GENUINENESS OF THE SO CALLED TRADE CREDITORS APPEARING IN ITS BOOK S OF ACCOUNT. WE ARE FURTHER OF THE OPINION THAT SINCE IN THE INS TANT CASE OF THE ASSESSEE, THE POINT UNDER CONSIDERATION BEFORE US I S REGARDING THE GENUINENESS OF THE LIABILITY AMOUNTING TO RS. 1,75, 26,586 SHOWN BY THE ASSESSEE IN ITS BALANCE-SHEET AS TRADE CREDI TORS, SO IT WAS NOT RELEVANT FOR US TO CONSIDER AS TO WHETHER THE P URCHASES MADE BY THE ASSESSEE WERE GENUINE OR NOT OR TO WHETHER T HE ASSESSEE HAS INFLATED THOSE PURCHASES OR NOT. IT IS ALSO NOT MATERIAL TO CONSIDER WHETHER THE GRS FROM SALE-TAX DEPARTMENT W ERE VERIFIED OR NOT, SO, THE CIT(A) ON CONSIDERING THESE POINTS WAS NOT JUSTIFIED IN DELETING THE IMPUGNED ADDITION WITHOUT DISCUSSING AS TO WHETHER THE LIABILITY OF TRADE CREDITORS SHOWN B Y THE ASSESSEE IN THE ABSENCE OF FURNISHING COMPLETE ADDRESSES OF TRADE ITA NO. 644/JP/2015 SH. SHANKAR JHALANI VS. ITO, JAIPUR 8 CREDITORS/CONSIGNORS AND THE PAYMENT VOUCHERS WAS G ENUINE OR NOT.' WHILE EVALUATING THE MATERIAL COLLECTED BY THE REVE NUE ON THE TOUCH STONE ON HUMAN PROBABILITY AND CONSIDERING TH E ACCRETION IN THE CLOSING BALANCE IN RESPECT OF PARTIES FOR WH ICH REVENUE HAS MATERIAL IN THEJFORM OF STATEMENT. WE FELL THAT THE LD. CIT(A) WAS REASONABLE IN CONFIRMING THE ADDITION OF RS. 5.00 L ACS. HENCE BOTH THE GROUNDS OF ASSESSEE AS WELL AS REVENUE ARE DISM ISSED. WE FURTHER NOTED THAT WHEN THE CORRESPONDING SALE I S NOT IN DISPUTE THEN THE QUESTION IS ONLY REGARDING THE COR RECT AMOUNT OF PURCHASES AND VERIFICATION OF THE SAME. THE LD. DR HAS RELIED UPON THE VARIOUS DECISIONS OF HONBLE GUJARAT HIGH COURT HOWEVER, WE FIND THAT IN ALL THOSE DECISIONS THERE WAS A FINDING OF FACTS THAT THE ASSESSEE INFLATED THE PURCHASES UPTO 25% AND THEREFORE, IT WAS NOT A CASE OF NON VERIFICATION OF THE PURCHASE AND REJECTION OF BOOKS OF ACCOUNTS BUT THE FACT WA S ESTABLISHED IN THE INVESTIGATION THAT THE ASSESSEE INFLATED THE PURCHASE PRICE AND ACCORDINGLY THE ADDITION OF 25% BEING INFLATED PURCHASES WAS MADE AND UPHELD BY THE TRIBUNAL WHICH WAS AGAIN UPH ELD BY THE HONBLE HIGH COURT. ON THE CONTRARY IN THE CASE OF THE ASSESSEE THE AO NOT GIVEN ANY FINDING OF INFLATED PURCHASES BY THE ASSESSEE BUT DOUBTED THE VERY TRANSACTION OF PURCHA SES DUE TO NON PRODUCTION OF THESE PARTIES BEFORE THE AO. THE AO HAS NOT GIVEN THE FINDING THAT THE PRICES OF THE GOODS WAS INFLATED BY THE ASSESSEE BUT THE AO DOUBTED THE GENUINENESS OF THE PURCHASES ON THE GROUND THAT THE SUPPLIERS WERE FOUND TO BE ACCOMMODATION ENTRIES PROVIDERS. WHEN THE AO REJECT ED THE BOOK RESULTS U/S 145(3) OF THE ACT, THEN THE AO AFTER RE JECTION OF THE BOOKS OF ACCOUNT CAN PROCEED TO MAKE THE ASSESSMENT ON THE BASIS OF BEST JUDGMENT INSTEAD OF RESORTING MAKE TH E ADDITION TO THE BOOK RESULTS. ACCORDINGLY, IN THE FACTS AND CIR CUMSTANCES OF THE CASE AND IN VIEW OF THE DECISION OF THIS TRIBUN AL IN ASSESSEES OWN CASE FOR A.Y. 2006-07 WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF THE LD. CIT(A) IN RESTRICTING THE ADD ITION TO THE ITA NO. 644/JP/2015 SH. SHANKAR JHALANI VS. ITO, JAIPUR 9 AVERAGE GP RATE BASED ON THE PAST HISTORY. HENCE, T HE GROUNDS RAISED IN THE REVENUE APPEALS ARE REJECTED BEING WI THOUT ANY SUBSTANCE OR MERITS. 6. IN THE CROSS OBJECTION OF THE ASSESSEE HAS RAISE D THE COMMON GROUNDS IS AS UNDER:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD . AO IN CONFIRMING THE TRADING ADDITION OF RS. 11.54 OUT OF THE TOTAL ADDITION OF RS. 96,69,746/- MADE BY THE LD. AO. THE ACTION OF THE LD. CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND A GAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE REJECTION OF BOOKS AND DELETING THE TRADING ADDITION OF RS. 1 1.54/-. 2. THE ASSESSEE CRAVES ITS RIGHTS TO ADD, AMEND OR ALTER ANY OF T HE GROUNDS ON OR BEFORE THE HEARING. 7. THE ASSESSEE HAS CHALLENGED THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE ADDITION TO THE EXTENT OF GP RATE. 8. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND C ONSIDERED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE A SSESSEE FAILED TO SUBSTANTIATE THE PURCHASES RECORDED IN THE BOOKS OF ACCOUNTS AND TO THAT EXTENT THE PURCHASES WERE NOT VERIFIABL E. THE ASSESSING OFFICER HAS ALSO POINTED THAT THE INVENTO RY OF CLOSING STOCK HAS BEEN VALUED ON ESTIMATED BASIS AS POINTED OUT AND SPECIFICALLY MENTIONED IN THE AUDIT REPORT AND THER EFORE, THE ASSESSEE WAS NOT MAINTAINING THE STOCK REGISTER SHO WING THE QUANTITY AND QUALITATIVE DETAILS INCLUDING THE PURI TY OF THE PREVIOUS MATTERS. THEREFORE, THE VALUATION OF THE C LOSING STOCK WAS ALSO FOUND TO BE ESTIMATED AND NOT THE ACTUAL A ND CORRECT VALUE. THE AO ISSUED SUMMONS TO THE PARTIES FROM WH OM THE ASSESSEE MADE THE PURCHASES HOWEVER, THERE WAS NO R ESPONSE AND NO COMPLIANCE OF THE NOTICE ISSUED BY THE AO TO THESE PARTIES. THUS, THE ASSESSING OFFICER HAS RIGHTLY PO INTED OUT THAT THE SALE TO THE EXTENT OF MORE THAN 60% OF THE ASSE SSEE WAS NOT ITA NO. 644/JP/2015 SH. SHANKAR JHALANI VS. ITO, JAIPUR 10 VERIFIABLE. THEREFORE, IN THESE FACTS AND CIRCUMSTA NCES OF THE CASE WHEN THE SALES OF THE ASSESSEE TO THE EXTENT OF MOR E THAN 60% IS NOT VERIFIABLE DUE TO THE FAILURE OF THE ASSESSEE T O PRODUCE THE RELEVANT EVIDENCE AND THE SUPPLIER THEN THE BOOK RE SULTS OF THE ASSESSEE WOULD NOT REFLECTED TRUE PICTURE AND CONSE QUENTLY IT WAS A SUFFICIENT AND PROPER GROUND FOR REJECTION OF BOO KS OF ACCOUNTS BY THE AO. THE LD. CIT(A) HAS DEALT WITH THIS ISSUE IN PARA 4.3 AS UNDER- 4.3 I HAVE CAREFULLY PERUSED THE ORDER OF THE AO A ND THE EXTENSIVE SUBMISSIONS OF THE AR. THE MOST PERTINENT POINT IN THE CASE OF THE ASSESSEE IS THAT THE HONBLE ITAT, JAIP UR BENCH HAS ALREADY ADJUDICATED IN IDENTICAL FACTS IN THE CASE OF THE ASSESSEE FOR A.Y. 2006-07 VIDE ITS ORDER ITA NO. 603/JP/2010 DATED 10.06.2011. SIMILAR DISALLOWANCES WERE MADE BY THE AO UNDER SIMILAR FACTS AND CIRCUMSTANCES AS ARE INVOLVED IN THE APPELLANTS PRESENT APPEAL FOR A.Y. 2005-06. ON PERUSAL OF THE SAME I FIND THAT THE HONBLE ITAT JAIPUR IN THE APPELLANTS CAS E FOR A.Y. 2006- 07 BASED ON A DETAILED DISCUSSION FROM PAGES 2 TO 9 HAS UPHELD THE REJECTION OF BOOKS OF ACCOUNT BY INVOKING THE P ROVISIONS OF S. 145(3) IN THE CASE OF THE ASSESSEE DUE TO UNVERIFIA BLE PURCHASES. THEREFORE, AS THE FACTS AND CIRCUMSTANCES ARE THE S AME IN THIS YEAR I UPHOLD THE DECISION OF THE AO TO REJECT THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND ESTIMATE HIS INCOME. THUS, THE LD. CIT(A) HAS DECIDED THIS ISSUE BY FOLL OWING DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASS ESSMENT YEAR 2006-07. HENCE, WE DO NOT FIND ANY ERROR OR ILLEGAL ITY IN THE ORDERS OF THE LD. CIT(A) QUA THIS ISSUE. HENCE, IN VIEW OF THE ABOVE, THE FACTS AND CIRCUMST ANCES OF THE CASE AS WELL AS THE DECISION OF THE COORDINATE BENCH OF THI S TRIBUNAL WE SET ASIDE THE MATTER TO THE RECORD OF THE ASSESSING OFF ICER FOR DETERMINATION ITA NO. 644/JP/2015 SH. SHANKAR JHALANI VS. ITO, JAIPUR 11 OF THE INCOME OF THE ASSESSEE ON THE BASIS OF THE P ROPER AND REASONABLE ESTIMATES AS WELL AS BEST JUDGMENT BY AP PLYING GP OR NP RATE. WE MAY CLARIFIED THAT EVEN AFTER REJECTION OF BOOKS OF ACCOUNTS IT MAY NOT NECESSARILY RESULTING A TRADING ADDITION IF THE GP RATE DECLARED BY THE ASSESSEE IS FOUND TO BE MORE THAN THE BENCH MARK TO BE APPLIED BY THE AO. HENCE, THE AO IS DIRECTED TO APPLY THE P ROPER GP RATE ON THE BASIS OF PAST HISTORY OF THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21/02/2018 SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 21/02/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SH. SHANKAR JHALANI, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ITO WARD 3(4), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 644/JP/2015} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR